• Goldman Sachs warns of significant U.S. stock market downturn
  • Factors include high leverage, poor tech earnings, Fed rate stance

Key Takeaway

  • Goldman Sachs’ Scott Rubner warns the US stock market could face significant declines, citing recent S&P 500 losses and high leverage.
  • Rubner highlights February’s historically poor performance for equities, suggesting further downside risk.
  • Despite a strong year-end rally prediction coming true, current analysis points to a bearish outlook for US stocks.

Market Vulnerabilities Exposed

Goldman Sachs Group Inc.’s tactical specialist, Scott Rubner, has issued a stark warning to investors, suggesting that the U.S. stock market is on precarious ground. Following a significant drop in the S&P 500 Index, which marked its worst decline in months, concerns have intensified. This downturn was influenced by disappointing Big Tech earnings and comments from Federal Reserve Chair Jerome Powell, who indicated that an interest-rate cut next month seems unlikely. Despite a slight recovery from the previous day’s losses, Rubner highlights “all-time high problems” for the U.S. equity market, citing “elevated leverage levels, stretched positioning in futures, and a drop in liquidity” as key factors that could exacerbate market vulnerabilities.

A Shift in Market Sentiment

Rubner’s recent analysis contrasts sharply with his earlier optimistic prediction for a strong year-end rally, which indeed saw the S&P 500 gaining about 14% in the last two months of the year and an additional 2% rise in 2024. However, his current stance reflects a significant shift in sentiment, emphasizing that the “pain trade is now lower, not higher from here.” This change is attributed to a combination of factors, including the recent tech earnings disappointments and the Federal Reserve’s stance on interest rates, which have collectively dampened the previously buoyant market mood. Rubner also points to a seasonal trend that suggests the second half of February is typically the worst two-week period for U.S. equities, further supporting his cautious outlook.

Implications for Investors

The implications of Rubner’s analysis for investors are clear: caution is warranted. With the S&P 500’s recent performance and the broader market dynamics at play, there is a heightened risk of further declines. Investors are advised to consider the potential for increased market volatility and to reassess their positions in light of these developments. Rubner’s warning serves as a reminder of the market’s inherent uncertainties and the need for vigilance in navigating these challenging conditions.



  • Scott Rubner, tactical specialist at Goldman Sachs Group Inc.:

    “If the US stock market goes down a little from here, it could go down a lot.”

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